II 

118TH CONGRESS 

2D SESSION S. 3937 

To require the appropriate Federal banking agencies to establish a 3-year 

phase-in period for de novo financial institutions to comply with Federal 

capital standards, to provide relief for de novo rural community banks, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 14, 2024 

Mrs. HYDE-SMITH introduced the following bill; which was read twice and 

referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To require the appropriate Federal banking agencies to establish a 3-year phase-in period for de novo financial 

institutions to comply with Federal capital standards, 

to provide relief for de novo rural community banks, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Promoting Access to 

5 Capital in Underbanked Communities Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) Trends in bank closures and consolidation 

2 have left many communities without access to bank3 ing services and disproportionately impact under4 served rural and urban communities. 

5 (2) De novo bank formation has slowed signifi6 cantly following the financial crisis. 

7 (3) A November 2019 report by the Federal 

8 Reserve System found that 44 counties in the 

9 United States were ‘‘deeply affected’’ by trends in 

10 bank closures and consolidation, meaning that the 

11 counties had fewer than 10 branches in 2012 and 

12 lost not less than 50 percent of them by 2017. 

13 (4) 89 percent of the deeply affected counties 

14 described in paragraph (3) were rural. 

15 (5) Rural counties deeply affected by branch 

16 closures had higher poverty rates, lower median in17 come, and a higher share of their population were 

18 African-American compared to all rural commu19 nities. 

20 SEC. 3. DEFINITIONS. 

21 In this Act: 

22 (1) APPROPRIATE FEDERAL BANKING AGENCY; 

23 DEPOSITORY INSTITUTION; DEPOSITORY INSTITU24 TION HOLDING COMPANY.—The terms ‘‘appropriate 

25 Federal banking agency’’, ‘‘depository institution’’, 


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1 and ‘‘depository institution holding company’’ have 

2 the meanings given those terms in section 3 of the 

3 Federal Deposit Insurance Act (12 U.S.C. 1813). 

4 (2) COMMUNITY BANK LEVERAGE RATIO.—The 

5 term ‘‘Community Bank Leverage Ratio’’ has the 

6 meaning given that term under section 201(a) of the 

7 Economic Growth, Regulatory Relief, and Consumer 

8 Protection Act (12 U.S.C. 5371 note). 

9 (3) FINANCIAL INSTITUTION.—The term ‘‘fi10 nancial institution’’ means a depository institution 

11 or depository institution holding company. 

12 (4) RURAL COMMUNITY BANK.—The term 

13 ‘‘rural community bank’’ means a financial institu14 tion— 

15 (A) with total consolidated assets of less 

16 than $10,000,000,000; and 

17 (B) located in a rural area, as defined in 

18 section 1026.35(b)(2)(iv)(A) of title 12, Code of 

19 Federal Regulations, or any successor regula20 tion. 

21 SEC. 4. PHASE-IN OF CAPITAL STANDARDS. 

22 The appropriate Federal banking agencies shall issue 

23 rules that provide for a 3-year phase-in period for a finan24 cial institution to meet any Federal capital requirements 

25 that would otherwise be applicable to the financial instituVerDate Sep 11 2014 07:06 Mar 27, 2024 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3937.IS S3937

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1 tion, where the 3-year period begins on the date on which 

2 the deposit insurance that the financial institution has ob3 tained from the Federal Deposit Insurance Corporation 

4 becomes effective. 

5 SEC. 5. CHANGES TO BUSINESS PLANS. 

6 (a) IN GENERAL.—During the 3-year period begin7 ning on the date on which the deposit insurance that the 

8 financial institution has obtained from the Federal De9 posit Insurance Corporation becomes effective, a financial 

10 institution may request to deviate from a business plan 

11 that has been approved by the appropriate Federal bank12 ing agency by submitting a request to the agency pursuant 

13 to this section. 

14 (b) REVIEW OF CHANGES.—An appropriate Federal 

15 banking agency shall, not later than the end of the 30- 

16 day period beginning on the receipt of a request under 

17 subsection (a)— 

18 (1) approve, conditionally approve, or deny the 

19 request; and 

20 (2) notify the financial institution of the deci21 sion and, if the agency denies the request— 

22 (A) provide the financial institution with 

23 the reason for the denial; and 


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1 (B) suggest changes to the request that, if 

2 adopted, would allow the agency to approve the 

3 request. 

4 (c) RESULT OF FAILURE TO ACT.—If an appropriate 

5 Federal banking agency fails to approve or deny a request 

6 within the 30-day period required under subsection (b), 

7 the request shall be deemed to be approved. 

8 SEC. 6. RURAL COMMUNITY BANK LEVERAGE RATIO. 

9 (a) IN GENERAL.—During the 3-year period begin10 ning on the date on which the deposit insurance that a 

11 rural community bank has obtained from the Federal De12 posit Insurance Corporation becomes effective, the Com13 munity Bank Leverage Ratio for the rural community 

14 bank shall be 8 percent. 

15 (b) PHASE-IN AUTHORITY.—The Federal banking 

16 agencies shall issue rules to phase-in the Community Bank 

17 Leverage Ratio described in subsection (a) with respect 

18 to a rural community bank by setting lower Community 

19 Bank Leverage Ratio percentages during the first 2 years 

20 of the 3-year period described in subsection (a). 

21 SEC. 7. AGRICULTURAL LOAN AUTHORITY FOR FEDERAL 

22 SAVINGS ASSOCIATIONS. 

23 Section 5(c) of the Home Owners’ Loan Act (12 

24 U.S.C. 1464(c)) is amended— 


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1 (1) in paragraph (1), by adding at the end the 

2 following: 

3 ‘‘(V) AGRICULTURAL LOANS.—Secured or 

4 unsecured loans for agricultural purposes.’’; and 

5 (2) in paragraph (2)(A), by striking ‘‘business, 

6 or agricultural’’ and inserting ‘‘or business’’. 

7 SEC. 8. STUDY ON DE NOVO FINANCIAL INSTITUTIONS. 

8 (a) STUDY.—The appropriate Federal banking agen9 cies shall, jointly, carry out a study on— 

10 (1) the principal causes for the low number of 

11 de novo financial institutions in the 10-year period 

12 ending on the date of enactment of this Act; and 

13 (2) ways to promote more de novo financial in14 stitutions in areas currently underserved by financial 

15 institutions. 

16 (b) REPORT TO CONGRESS.—Not later than the end 

17 of the 1-year period beginning on the date of enactment 

18 of this Act, the appropriate Federal banking agencies 

19 shall, jointly, issue a report to Congress containing all 

20 findings and determinations made in carrying out the 

21 study required under subsection (a). 

Æ 


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